Problems Of Economic Democracy

The main problem of economic democracy goes with modern society capabilities of purchasing its output production. This problem lies literally speaking in a matter of not earning enough income. Command economies dominate and balanced mixed economies existed only for some shirt periods of time. Dangerous trends are powered by common resources that often are being monopolized by big imperial centers. With power and wealth being placed in one center a huge-scale social imbalance is rising in pair with economic looseness.

Economic democracy, like any other system considers wealth as a total of all material things produced to satisfy desires of people, plus exchange value. We need to count labor and land as two most important factors in wealth production. The land is not only about owning a part of our planet but all the natural forces, resources and opportunities that comes with a land. Human exertions is labor. Any small portion of wealth that is used to gain more wealth is called the capital.
From the end years of 19th century we know that the most of wealth is always created (of course in capitalistic economy of free market) by the land owners and all the monopolists. This produces masses of unearned wealth providing common poverty. From this point of view private savings are not necessary for economy to grow, but could also have harmful influence. As money became successful mechanism of commanding people, in every advanced industrial society business credit is necessary. Credit is ofter cheaper than stockpiling cash for longer period of time. And that also could prove that even big, old and rich companies must invest in innovation systems to provide successful future. Those words, by Henry George are considered wise even now, and it is good to know how capitalism is really working

Recession occurs when all those private savings are not reinvested again. It can also result in unemployment and massive fall of live level. Even retained earnings must be spent because if those are deposited in bank may not result in new purchases. The whole economy is based not on earnings but on exchanges. The capital must flow from hands to hands to increase people wealth. This simple idea stands behind all the secrets of modern economy and all financial collapses. If the proper flow of cash is reduced, the whole system is catching a cold. If the money flows without any problems “” we have golden years of prosperity.